Florida Senate - 2017                                     SB 560
       By Senator Campbell
       38-00902-17                                            2017560__
    1                        A bill to be entitled                      
    2         An act relating to small business participation in
    3         state contracting; creating s. 287.0577, F.S.;
    4         defining the terms “contract bundling” and “small
    5         business”; specifying circumstances under which
    6         agencies must avoid contract bundling; requiring
    7         agencies to conduct market research and include
    8         written summaries and analyses of such research in
    9         solicitations for bundled contracts; requiring certain
   10         agencies to award a percentage of contracts to small
   11         businesses; requiring contract vendors to use small
   12         businesses in the state as subcontractors or
   13         subvendors; providing requirements with respect to
   14         payment of prime contractors and subcontractors;
   15         prohibiting agencies, general contractors, and prime
   16         contractors from requiring certain bonds or other
   17         sureties for certain contracts; requiring the rules
   18         ombudsman in the Executive Office of the Governor to
   19         establish a system for reporting small business
   20         participation in state contracting; requiring agencies
   21         to cooperate with such reporting; requiring specified
   22         annual reports; providing an effective date.
   24  Be It Enacted by the Legislature of the State of Florida:
   26         Section 1. Section 287.0577, Florida Statutes, is created
   27  to read:
   28         287.0577 Small business participation in state contracting;
   29  contract bundling; set-asides for small businesses; bonding and
   30  reporting requirements.—
   31         (1) DEFINITIONS.—As used in this section, the term:
   32         (a) “Contract bundling” means the consolidation of
   33  contracts for the procurement of commodities or contractual
   34  services, at least part of which may be provided or performed by
   35  one or more small businesses, into a single contract that is not
   36  appropriate for award to a small business as the prime
   37  contractor.
   38         (b) “Small business” means a business entity organized for
   39  profit which is independently owned and operated, not dominant
   40  within the business entity’s industry, and:
   41         1. Is currently, and for at least the previous 3 years has
   42  been, domiciled in the state.
   43         2. Has a workforce of 50 or fewer permanent full-time
   44  positions, whether employees, independent contractors, or other
   45  contract personnel.
   46         3. Has had, for at least the previous 3 years, average
   47  annual gross sales that do not exceed the following:
   48         a. For a contractor licensed under chapter 489, $5 million
   49  per year.
   50         b. For a sole proprietorship performing contractual
   51  services within the scope of the proprietor’s professional
   52  license or certification, $500,000 per year.
   53         c. For any other business entity, $1 million per year.
   54         4. Currently has, and for at least the previous 3 years has
   55  had, together with its affiliates, a net worth that does not
   56  exceed $5 million. For a sole proprietorship, the net worth
   57  limit of $5 million includes both personal and business
   58  investments but does not include the proprietor’s primary
   59  residence.
   61  The term includes any such business entity organized as any form
   62  of corporation, partnership, limited liability company, sole
   63  proprietorship, joint venture, association, trust, cooperative,
   64  or other legal entity.
   66         (a) An agency, to the maximum extent practicable, shall
   67  structure agency contracts to facilitate competition by and
   68  among small businesses, taking all reasonable steps to eliminate
   69  obstacles to participation and avoiding unnecessary contract
   70  bundling that may preclude small businesses’ participation as
   71  prime contractors.
   72         (b) Before issuing a solicitation for a bundled contract,
   73  an agency must conduct market research to determine whether
   74  contract bundling is necessary. If the agency determines that
   75  contract bundling is necessary, the agency must include in the
   76  solicitation a written summary of the agency’s market research
   77  and a written analysis of the research which explains why
   78  contract bundling is necessary.
   80         (a) An agency shall annually award to small businesses,
   81  either directly or indirectly as subcontractors, at least 35
   82  percent of the total dollar amount of contracts awarded.
   83         (b) Each contract awarded under s. 287.057 must require the
   84  vendor to use small businesses as subcontractors or subvendors.
   85  The percentage of funds, in terms of gross contract amount and
   86  revenues, which must be expended for subcontracting with small
   87  businesses, shall be determined by the agency before the
   88  solicitation for the contract is issued; however, the contract
   89  may not allow a vendor to expend less than 35 percent of the
   90  gross contract amount for subcontracting with small businesses.
   91         (c) Each contract must include specific requirements for:
   92         1. The timely payment of subcontractors by the prime
   93  contractor and specific terms and conditions applicable if a
   94  prime contractor does not pay a subcontractor within the time
   95  limits specified in the contract.
   96         2. The prompt payment by an agency to the prime contractor
   97  within 12 calendar days, and payment by a prime contractor of a
   98  subcontractor, subvendor, or subconsultant within 2 calendar
   99  days, after receipt of a proper pay application or invoice. All
  100  contracts must include twice a month billing. Each contract must
  101  conform to the requirements of this subparagraph by no later
  102  than July 1, 2020.
  103         (4) BONDING REQUIREMENTS.—Notwithstanding any other
  104  provision of law, an agency, a general contractor, or a prime
  105  contractor may not require a vendor to post a bid bond,
  106  performance bond, or other surety for a contract that does not
  107  exceed $500,000. This subsection does not apply to any
  108  requirement for posting a bond pending the protest of a
  109  solicitation; the protest of a rejected bid, proposal, or reply;
  110  or the protest of a contract award.
  111         (5) REPORTING REQUIREMENTS.—The rules ombudsman in the
  112  Executive Office of the Governor shall:
  113         (a) Establish a system to measure and report the use of
  114  small businesses in state contracting. This system must maintain
  115  information and statistics on small business participation,
  116  awards, dollar volume of expenditures, and other appropriate
  117  types of information to analyze progress in small businesses’
  118  access to state contracts and to monitor agency compliance with
  119  this section. Such reporting must include, but is not limited
  120  to, the identification of all subcontracts in this state
  121  contracting by dollar amount and by number of subcontracts and
  122  identification of the use of small businesses as prime
  123  contractors and subcontractors by dollar amounts of contracts
  124  and subcontracts, number of contracts and subcontracts,
  125  industry, and any conditions or circumstances that significantly
  126  affected the performance of subcontractors. An agency shall
  127  report its compliance with the reporting system at least
  128  annually and at the request of the rules ombudsman in the
  129  Executive Office of the Governor. All agencies shall cooperate
  130  with the rules ombudsman in the Executive Office of the Governor
  131  in establishing this reporting system.
  132         (b) Report agency compliance with paragraph (a) for the
  133  preceding fiscal year to the Governor and Cabinet, the President
  134  of the Senate, and the Speaker of the House of Representatives
  135  by February 1 of each year. The report must contain, at a
  136  minimum, the following:
  137         1. Total expenditures of each agency by industry.
  138         2. The dollar amount and percentage of contracts awarded to
  139  small businesses by each agency.
  140         3. The dollar amount and percentage of contracts awarded
  141  indirectly to small businesses as subcontractors by each agency.
  142         4. The total dollar amount and percentage of contracts
  143  awarded to small businesses, whether directly or indirectly as
  144  subcontractors.
  145         Section 2. This act shall take effect July 1, 2017.